SPI Working Paper Series

WP #: 104

Date: Dec 2014


Other Sources

@ Other

Mental Accounts, Selective Attention, and the Mutability of Altruis: An Experiment with Online Workers

    David Clingingsmith

    Case Western Reserve University

The theory of mental accounts holds that we classify income by source and link sources to appropriates use (Thaler, 1999). When deciding whether to share money with another, we consider our resources. I conduct a framed field experiment in which participants accrue 1) earned income from a real-effort task and 2) windfall income, then make a sharing choice. I find that participants pay selective attention to the income sources at hand in a self-interested way. Their marginal willingness to give is positive only for a token accruing to the account with the largest balance. They ignore the smaller account and the total. This behavior is con- sistent with a self-signaling model in which multiple mental accounts reduce the strength of the bad signal sent by being selfish (Benabou and Tirole, 2011)

SPI Quick Look:
Are people equally generous with money they have earned with their work and windfall money? Do people treat these earnings as fungible? This paper suggests that the answer is no to both questions: people tend to be more generous with windfall money than earned money, and when income comes from both sources, people tend to share some of the money that comes from the "largest" account, but keep the other source for themselves. This suggests that people categorize different earnings under different "mental accounts", and they exploit this psychological bias at their advantage.